Report of 2016, the national unemploy- ment rate was 12.75 percent. Unemploy- THE BAHAMAS Key conditions and ment was 4 percentage points higher for women than for men, and 15 percentage challenges points higher for youth below 25 years than among adults 25 years and older. Table 1 2021 The Bahamas is a high-income service Vulnerability to climate change and global Population, million 0.4 economy heavily dependent on tourism health risks jeopardize the country’s devel- GDP, current US$ billion 11.5 and financial services. GDP has risen opment trajectory. Sea-level rise associat- GDP per capita, current US$ 29087.8 steadily over the past 3 decades, with an- ed with increasing temperatures threatens a 96.1 School enrollment, primary (% gross) nual growth averaging 1.4 percent in real The Bahamas’ low-lying islands in addi- a 73.9 terms. Nonetheless, the country’s econom- tion to the severe impacts of disasters such Life expectancy at birth, years Total GHG Emissions (mtCO2e) 2.3 ic position remains vulnerable due to its as Hurricane Dorian in 2019. Source: WDI, Macro Poverty Outlook, and official data. small size, lack of economic diversification The COVID-19 pandemic led to a steep a/ Most recent WDI value (2019). and vulnerability to natural disasters. The decline in tourism arrivals and the re- Bahamas relies significantly on foreign in- sulting job losses have been particularly vestment, especially related to tourism. felt by vulnerable populations, such as Tourism, together with tourism-driven low-income households, informal work- construction and manufacturing, accounts ers, and women. School closures are like- for approximately 60 percent of GDP and, ly to have impacted learning, with poten- GDP is estimated to have expanded by directly or indirectly, employs about half tial longer-term impacts on human capital 5.6 percent in 2021, as tourist arrivals of the country's workforce. and potential earnings. to the islands rebounded thanks to vac- Economic growth in recent decades has The pandemic also negatively impacted cination efforts in The Bahamas and eas- not been distributed evenly across all seg- women’s day-to-day lives in The Ba- ments of the population. According to the hamas. Women’s workload in the house- ing travel restrictions in main tourism 2013 Household Expenditure Survey, 12.8 hold increased more than that of men, markets. Tourism remains the country’s percent of the population lived below the as related to homeschooling for example, main economic activity and source of national poverty line. Moreover, inequality 62.8 percent of women and only 25.8 per- revenue, with over 50 percent of the la- was well above the average of high-income cent of men are dealing with the addi- economies, with a Gini index of 41.4. tional workload of supporting children bor force employed in the sector. The While no official poverty indicators have with schoolwork. current account deficit remains high but been produced since 2013, The Bahamas narrowed to 19.3 percent of GDP. Fiscal has exhibited improvements in other areas, accounts deteriorated in 2021, but the such as education and life expectancy, as country is expected to restore the fiscal reflected by the 2 percent increase in the Recent developments Human Development Index (HDI) in the consolidation and reconstruction efforts past two decades. GDP expanded by 5.6 percent in 2021, fol- following Hurricane Dorian. Similar to economic growth, economic op- lowing a 14.5 percent contraction in 2020. portunities have not been inclusive. Ac- Tourist arrivals to the islands grew at a cording to the Labor Force and Household faster pace during the second half of 2021, FIGURE 1 The Bahamas / Real GDP growth and FIGURE 2 The Bahamas / Fiscal balances and public debt contributions to real GDP growth Percent, percentage points Percent of GDP Percent of GDP 10 120 4 102.8 2 87.3 5 100 91.3 0 85.2 74.1 -2 0 80 59.7 -4 -5 60 -6 -8 40 -10 -10 -12 20 -15 -14 2019 2020 2021e 2022f 2023f 2024f 0 -16 Private Consumption Government Consumption 2019 2020 2021e 2022f 2023f 2024f Investment Net trade Real GDP Growth Debt (lhs) Fiscal balance Primary balance Sources: Government of The Bahamas; IMF and World Bank staff estimates. Sources: Government of The Bahamas; IMF and World Bank staff estimates. MPO 1 Apr 22 totaling nearly 2 million for the entire year. total public debt jumped to 102.8 percent of record a primary surplus in FY2023/24. This is still below the record inflow of 7.2 GDP in 2021, compared to 74.1 percent of Public debt is projected to decrease once million tourists in 2019. The hotel occu- GDP in 2020. the economy is back on the growth path, pancy rate averaged 50 percent in 2021. The external sector was particularly hit by as revenues rebound, and pandemic-re- Tourism-related FDI projects, together the COVID-19 pandemic, as net travel re- lated expenditures are wound down but with post-hurricane rebuilding efforts sup- ceipts make the largest contribution to the will remain above 85 percent of GDP in ported the construction sector output. current account balance. In fact, the ser- the medium term. Unemployment increased 5 percentage vices account balance posted deficits from The current account deficit is expected to pointsin2020asaresultofthepandemic,set- the second quarter of 2020 to the third decrease to 18.1 percent of GDP in 2022, ting the labor market back to the 2009 level, quarter of 2021. The current account deficit as tourism receipts expand. An improve- with an estimated 14.4 percent unemploy- was 19.3 percent of GDP in 2021, an im- ment of the account deficit is also ex- ment rate. Estimates suggest that unem- provement from 23.5 percent of GDP in pected for 2023 and 2024, with projec- ployment fell to 13.2 percent in 2021, and it is 2020. It was financed through borrowing tions of 12.6 percent of GDP and 8.6 per- predicted to fall below 13percent in 2022. from capital markets and IFIs as well as cent of GDP, respectively. Outlook is sub- The Bahamas was hit by two coronavirus through decreasing international reserves. ject to significant uncertainty related to waves in 2021, in August and end-Decem- the possibility of new travel restrictions ber. Vaccination started in March 2021 and worldwide affecting tourist arrivals to the only 40 percent of the population was fully country; there are also global geopolitical vaccinated by February 2022. As a com- Outlook risks, as well as the risk of natural disas- plement to vaccination efforts, the govern- ters. Higher oil prices and imported infla- ment launched free COVID-19 testing this The economy is expected to grow by 6.0 tion due to global geopolitical risks may year and announced the elimination of percent in 2022 and 4.1 percent in 2023, trigger higher consumer prices with im- curfews and lockdowns, enhancing the as tourism flows to the island continue to plications for the poorest. The govern- prospects for economic recovery. revert to pre pandemic levels. The vacci- ment will continue to finance the rebuild- CPI inflation is estimated at 3.2 percent for nation campaign will continue with sup- ing of public and private buildings to in- 2021. The highest increases were registered port from PAHO/WHO donations. The in- crease their resilience to natural disasters in food, beverages, and clothing, dispro- flation rate is projected to significantly in- as well as to implement a mitigation pol- portionately affecting the purchasing pow- crease to 7.3 percent in 2022, pushed by en- icy for climate change. er of the poor and vulnerable. ergy and oil prices, and to average around The pandemic will erase some of the Public finances continued to deteriorate 3.6 percent in the medium-term. The pri- progress in recent years in terms of human during FY 2020/21 to a 9.4 percent of GDP mary and overall fiscal deficits will im- development and is expected to increase primary deficit and 13.6 percent of GDP prove in FY2021/22 to 2.7 percent of GDP poverty and inequality, widening the di- overall deficit, after recording a 3.9 percent and 6.7 percent of GDP respectively. They vide for women, youth, informal workers, of GDP primary deficit and a 7.0 percent of are expected to steadily improve in the fol- and other vulnerable populations. Recov- GDP overall fiscal deficit in FY 2019/20. lowing two years in response to the gov- ery efforts need to support these groups In part due to the government’s comprehen- ernment’s expenditures reduction efforts decisively and allow for more diversifica- sive response to the COVID-19 pandemic, as well as needed tax reforms, and will tion of income sources. TABLE 2 The Bahamas / Macro poverty outlook indicators (annual percent change unless indicated otherwise) 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices 0.7 -14.5 5.6 6.0 4.1 3.0 Real GDP growth, at constant factor prices 0.7 -14.5 6.0 5.9 4.1 3.0 Agriculture -0.8 -8.8 -1.3 3.6 4.8 4.8 Industry -1.0 -2.0 1.7 3.5 1.4 1.7 Services 1.0 -16.4 6.8 6.3 4.5 3.2 Inflation (Consumer Price Index) 2.5 0.0 3.2 7.3 4.5 3.3 Current Account Balance (% of GDP) 4.0 -23.5 -19.3 -18.1 -12.6 -8.6 Net Foreign Direct Investment (% of GDP) 2.0 2.2 2.2 2.4 2.8 2.6 a Fiscal Balance (% of GDP) -1.6 -7.0 -13.6 -6.7 -3.5 -3.1 a Debt (% of GDP) 59.7 74.1 102.8 91.3 87.3 85.2 a Primary Balance (% of GDP) 1.3 -3.9 -9.4 -2.7 0.2 0.9 GHG emissions growth (mtCO2e) 1.2 -15.3 2.1 11.1 4.0 3.5 Energy related GHG emissions (% of total) 87.6 86.7 86.2 86.9 86.9 86.9 Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD. a/ Fiscal balances are reported in fiscal years (July 1st -June 30th). MPO 2 Apr 22